Oil Hits Highest Since 2022, Hormuz Still Freezing Supply
Oil prices surged on Wednesday (April 29) to their highest level since June 2022 as there was no sign of an end to the US-Iran war and energy flows through the Strait of Hormuz remained blocked, raising concerns about a dwindling global supply cushion.
Brent briefly rose more than 7% to US$119.50/barrel before paring gains and closing around US$118/barrel, its highest level since the Iran war broke out two months ago. Trading was also volatile as market participants rolled over positions ahead of the June contract's expiry on Thursday. WTI ended the session just below US$107/barrel.
The latest rise saw Brent erase all losses since the US and Iran agreed to a temporary ceasefire earlier this month. The market is now increasingly pricing in a prolonged conflict, amid what has been described as a record supply shock and a global energy crisis that is further restricting supplies.
Several signs suggest that negotiations have not yet reached a compromise. President Donald Trump reportedly discussed extending the US naval blockade of Iran in a meeting with oil and trade industry executives. Axios reported that Trump also rejected Iran's proposal to reopen the Strait of Hormuz, when traffic through the waterway had virtually halted.
With Hormuz remaining closed, market attention has shifted to US supplies as a key buffer against Middle East disruptions. Government data released Wednesday showed domestic oil inventories declining as US exports rose to a record high. Meanwhile, the blockade has become a major point of contention, as Iran has declared it will not resume negotiations or open Hormuz as long as US restrictions remain in place, keeping the flow of crude oil, natural gas, and petroleum products from the Persian Gulf cut off since late February. The impact has already been felt in the spike in gasoline, diesel, and aviation fuel prices, reviving inflation concerns.
Market participants are also digesting news that the United Arab Emirates will leave OPEC, but the cartel's dynamics are considered a secondary factor as long as Hormuz remains locked and about a fifth of global oil and LNG supplies are unable to reach the market. At the close, June WTI rose 7% to US$106.88/barrel, June Brent rose 6.1% to US$118.03/barrel, while the July Brent contract closed at US$110.44/barrel. (Arl)*
Source: Newsmaker.id
